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Monday, October 16, 2017

'Staggering': Young people twice as likely to be on Centrelink benefits if parents were

Children of parents on Centrelink benefits are almost twice as likely to be on benefits themselves by their early 20s as children who are not.

The world-first finding, culled from 18 years of Centrelink records, calls into question the conventional wisdom that it is easy for Australians to escape their upbringing.

The researchers from the Universities of Melbourne and Sydney were granted unprecedented access to the lifetime payment records of 124,285 young Australians born between October 1987 and March 1988.

They examined their payment status at the ages of 18, 20 and 26, and hope to do so again at the age of 30.

They found that 32 per cent of the children born to parents not in receipt of benefits were themselves on some sort of benefit by the ages of 18 to 26. But among those born to parents who were on benefits, the proportion was almost twice as high at 58 per cent, a ratio of 1.8 to 1.

The effect was the most pronounced for the children of parents on single-parent benefits and disability and carer payments.

Young people who had grown up with parents who received disability mental health payments received 2.4 times the amount of social assistance as their peers who had grown up in families that did not receive them, and 4 times the assistance of children who grew up in families with no history of social assistance at all.

Young people who had grown up with a parent on the single parenting payment received 2.2 times the assistance of other young.

In contrast, young people who had grown up in families receiving Newstart or the partnered-parent benefits received just 1.5 to 1.7 times as much assistance as other people in life.

Importantly, the researchers found that young people who had grown up in single parent or disability payment household were far more likely than other young people to be on welfare payments of all types, not just single parent of disability payments.

Researcher Deborah Cobb-Clark of Sydney University said she was shocked by the finding and took some time to be convinced.

"Disability is pretty random. For the children of parents on disability benefits to themselves be on welfare later on life is kind of like lightning striking twice," she said.

"I had thought the biggest correlation would be unemployment benefits, because they are related to investments in education."

Professor Cobb-Clark said she wasn't aware of another team anywhere in the word that had looked at the intergenerational correlation of benefit payments across an entire system.

"There will be other people who follow this with other work, so maybe this is not the end of the story, but I think what is going on is that the disadvantage for kids whose parents are on disability benefits and single parent payments is just really intense, and it is manifested itself in all kinds of things happening to them before they are 26: they are more likely to be on unemployment benefits, they are more likely to be on the caring benefit themselves, they are more likely to be on disability benefits.

"It happens to a fairly small group of people, but if you are one of those people it looks very difficult to overcome."

So large was the Centrelink dataset that the University of Sydney had to build a "virtual computer" linking hundreds of others to process it.

University of Melbourne researcher Nicolás Salamanca said the finding ought to be a "game changer" for the way governments designed social policy. "This isn't survey data. It's almost 100 per cent coverage, drilling down into 126 million fortnightly payments. The results are staggering," he said.

"The government is talking about an investment approach to welfare, funding what works, but until now it has had little idea about what leads to what in subsequent generations".

The paper, to be published by Melbourne University on Monday, makes clear that it has not found that welfare payments themselves lead to more welfare payments.

"If anything, it's the reverse," said Professor Cobb-Clark. "Young people who grew up in disadvantaged families would not be better off had their families never received benefits.

"The benefits are a marker for something that's happened. It is important that people don't jump to the conclusion that we can fix all this by taking them away."

In The Age and Sydney Morning Herald